Categories: Legal

Deutsche Bank Forks Over $150M In Epstein, Foreign Bank AML Settlement

Deutsche Bank has agreed to a $150 million settlement with New York regulators over allegations that the giant German bank was effectively asleep at the switch in monitoring suspicious financial transactions involving Jeffrey Epstein.

The New York State Department of Financial Services (DFS) on Tuesday (July 7) announced the settlement with Deutsche Bank and its various U.S. subsidiaries, contending that the bank “failed to properly monitor account activity conducted on behalf of the registered sex offender.”

Epstein pled guilty in 2008 to prostitution charges in Florida as part of a highly controversial plea deal that helped the now deceased multimillionaire evade charges of recruiting underage teenage girls for sex.

Just over a year ago, Epstein was arrested on federal sex trafficking charges, later hanging himself in the Manhattan jail where he was locked up while awaiting trial.

“Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system, and it is fundamental that banks tailor the monitoring of their customers’ activity based upon the types of risk that are posed by a particular customer,” said Linda Lacewell, superintendent of the New York State DFS, in a press release.

Deutsche Bank should have been aware of Epstein’s background and his status as a convicted sex offender when the bank started handling his accounts in 2013, New York financial regulators contend. Instead, the bank failed to raise red flags over a number of suspicious transactions, including payments to Russian models and to “Mr. Epstein’s co-conspirators in sexually abusing young women,” the DFS noted in a press release.

The charges are the first to be made by a regulator against a financial institution (FI) for dealings with Epstein, DFS noted.

In response, Deutsche Bank posted a statement on Twitter.

“We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes,” the bank stated. “We have learned from our mistakes and deeply regret our association with Epstein.”

The settlement with DFS also included charges that Deutsche Bank failed to properly monitor transactions involving foreign bank clients, including Danske Estonia, “at the center of one of the world’s largest money laundering scandals” involving Russian oligarchs and FBME Bank, another “high-risk” client.

In particular, Deutsche Bank failed to prevent Danske Estonia “from transferring billions of dollars of suspicious transactions through Deutsche Bank accounts in New York,” DFS noted in its statement on the settlement.

Deutsche last year inked a $16 million settlement with German prosecutors over violations of anti-money laundering (AML) laws in that country.

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